• A Hawkish Hike

    Posted on June 13, 2018 by Gemmer Asset

    It’s not exactly a shocker the Fed hiked interest rates by another 25bps today. But going into to today’s meeting the market had started to think the Fed might ease up on future rate hikes. After all:   1) Emerging markets were starting to show some stress.   a.  Take Brazil   b.  Or Argentina   c.  Both the Indian and Indonesian’s central bank heads took the Fed to task about tightening.   2) Recent speeches…
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  • What Does the Yield Curve Tell Us?

    Posted on June 7, 2018 by Gemmer Asset

    What Does the Yield Curve Tell Us?   If you have had the unfortunate pleasure of reading the financial press over the last few months you have invariably run into articles talking about the shape of the yield curve and the bad things it portends.  A ten second internet search gives the following headline from the Wall Street Journal (see box to the right).  If you peruse the darker underbelly of online financial news you…
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  • Labor Market: Haven’t Seen This Before

    Posted on June 6, 2018 by Gemmer Asset

    The labor market set something of a record this week. For the first time since records have been kept (OK, the data only goes back to 2000, but cut us some slack here!), job openings in the U.S. exceed the number of unemployed workers. Bloomberg has a quick summary here.     This report coming on the heels of last Friday’s payrolls reports basically guarantees the Fed hikes next Wednesday by another quarter point. This…
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  • Forecasts for Q2 GDP: Its all about the inputs…

    Posted on June 4, 2018 by Gemmer Asset

    The Atlanta Fed, who maintains a model that attempts to estimate future US GDP data releases came out with their latest Q2 forecast:     This estimate is definitely an outlier.  Consensus among top economists is that growth will come in around 3.2% (blue line above).  And the New York Fed’s own model is predicting a 3.3% print.  If the Atlanta Fed’s 4.8% number holds however, it would be the best real quarterly growth since…
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  • Market Update

    Posted on June 1, 2018 by Gemmer Asset

      The markets were pulled back and forth on political uncertainty this week. First, Italy sparked euro breakup fears again as a new coalition government looked like it might fail. Then the U.S. administration upped the ‘trade war’ rhetoric. Despite the political uncertainty, equities in the U.S. managed to gain ground, with the S&P 500 adding +0.5% while small-cap U.S. stocks advanced +1.3% and the NASDAQ +1.6%. The overseas markets were weaker with the developed…
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  • Are Hedge Funds Unfairly Criticized?

    Posted on by Gemmer Asset

    Cliff Asness from AQR put together a very interesting piece rebutting some of the negative press surrounding hedge fund returns.  The gist of the piece is that the financial press misses the mark when criticizing hedge funds.  They inevitably compare something with a beta of far less than 1 (hedge funds) to something with a beta of 1 (the S&P 500 or the market).  While there are perfectly valid criticisms of hedge funds, not keeping up…
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  • Recent ETF Flows

    Posted on May 30, 2018 by Gemmer Asset

    There have been some interesting things happening with ETF flows over the past month or so.  Below is a chart of some of the larger country ETF in/outflows over the past month (all asset classes – equities, fixed income, currency, etc):     As questions surrounding Italy’s debt load become the topic du jour, Eurozone focused ETFs have borne the brunt of investors’ concern… If you count regionally focused Eurozone ETFs as well as specific European…
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  • Market Update

    Posted on May 11, 2018 by Gemmer Asset

      It was a broadly positive week for the equity markets. Domestic stocks were up +2.0% to +2.5% while the overseas markets lagged modestly. For all the uncertainty about trade policy and geopolitics, the markets have been buoyed by robust earnings reports and a raft of share buyback announcements.   This week’s tamer than expected inflation report calmed the bond market, at least temporarily. Both 2-year and 10-year yields drifted higher and most bond categories…
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  • Market Update

    Posted on April 27, 2018 by Gemmer Asset

      A lot of back and forth this week but stocks really didn’t go anywhere. The S&P 500 and EAFE were basically unchanged and small-cap U.S. stocks lagged modestly. Jitters about rising interest rates were largely offset by decent earnings reports (more below) and a lessening of tensions on the Korean Peninsula (who would have thought?).   10-year Treasury bond yields briefly surmounted the 3% threshold for the first time since 2014, as you can…
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  • Market Update

    Posted on April 13, 2018 by Gemmer Asset

      It was a decent week for the global equity markets with broad based gains. The S&P and developed EAFE index both advanced +2.0% while small-cap U.S. equities modestly outperformed. Commodities performed well given the over +10% rally in crude oil. Interest rates ticked higher and intermediate-term government bonds lost -0.3%. Low quality high-yield bonds performed strongly, though, with a +1.2% gain for the week.   Conflicting Themes   In our latest quarterly letter, which…
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